A Leveraged ETF for All Market Conditions

By Christian Hill

Most investors would agree that in tough economic times one safe haven is consumer staples. Companies like Johnson & Johnson, Coke, and Philip Morris do well in all markets, and tend to weather storms better than companies that sell discretionary goods.

In order to own as many consumer staple companies as possible, a lot of investors utilize the XLP, an ETF (exchange traded fund) covering that sector. What they may not know is that there is also an ETF that offers leveraged returns on the same sector.

The ProFunds Consumer Goods UltraSector (CNPIX) is structured such that it will correspond to 150 percent of the daily movement in the Dow Jones U.S Consumer Goods Index. For example, if the Consumer Goods Index goes up by 2 percent on a given day, the CNPIX will go up 3 percent.

This allows investors to own a basket full of consumer staple companies without being exposed to the risk of owning the individual companies. All while getting returns that outpace the underlying companies.

The CNPIX is well diversified, so you aren’t subject to large price movements if one or two of the companies in the fund go up or down. The largest company holding in the ETF is Procter & Gamble, and the two largest industry holdings are beverages and household goods.

If you are looking for a way to add a nearly recession-proof ETF to your portfolio and get leveraged returns, take a serious look at the CNPIX.

[Ed. Note: Despite the gloom and doom about the economy, you can still find ways to make money in the markets.]
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This article appears courtesy of Early to Rise [Issue #2396, 07-01-08], the Internet's most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com/.